I know nothing about Free DOS, but it may require FAT 32. I have no idea.
I seriously doubt the 58 GB drive needs to be that large. You could shrink it and then reassign the saved space to the other drive, using Partition Wizard bootable disk.
If you have a Windows 7 installation disc and a valid Product Key, you could start over and get rid of the FAT 32 partition entirely.
If you don't have an installation disk, you can download an ISO.
I don't know what would happen if you convert the FAT32 partition to NTFS. Maybe that would work fine, but I am wondering why the manufacturer used FAT32.
If I had an install disc and no need for Free DOS, I would probably start over.
If you don't want to start over, you should certainly be able to shrink the 58 GB partition way down--maybe to 1 GB or less.
I'm not sure what you mean by "availed".
The 58 GB partition also appears to contain your boot files, so it cannot simply be deleted unless you do a clean installation.